Save Article

Lower Mortgage Rates Caused
Home Sales to Surge in March

WASHINGTON -- Lower mortgage rates helped new-home sales unexpectedly surge to a record in March, while existing-home sales jumped 4.8% to a near record.

U.S. Durable-Goods Orders Surged 3% During March

See the full text of the Commerce Department's report on March new-home sales.

See Briefing.com for more information about the report on new-home sales.

See the full text of the National Association of Realtors' report on March existing-home sales.

See Briefing.com for more information about the report on existing-home sales.

New single-family home sales rose 4.2% to a seasonally adjusted annual rate of 1,021,000 in March, the Commerce Department said Wednesday. February sales, which previously had been reported as a 2.4% drop to a 911,000 annual rate, were revised as a gain of 1.2% to a 980,000 annual rate.

The numbers were much stronger than Wall Street was expecting. Economists surveyed by Thomson Global Markets expected that home sales would edge down 0.1% to an annual rate of 910,000.

According to Freddie Mac, the national average commitment rate for a 30- year, conventional, fixed-rate mortgage was 6.95% in March, down from 7.05% in February; and 8.24% in March 2000.

While the housing sector has remained strong the past several months as other parts of the U.S. economy have sagged, the stronger-than-expected new-home sales report may suggest that the pace of the current economic slowdown could be beginning to wane. Earlier Wednesday, the Commerce Department reported that durable goods orders rose a stronger-than-expected 3% in March.

By region, new-home sales jumped 38.8% in the Northeast, 15.3% in the Midwest and 8.4% in the South. New-home sales fell by 17.2% in the West.

The supply of homes on the market fell in March to 3.6 months' supply from February's 3.7 months' supply.

The median price for a new home, the midpoint of all prices, was $164,900 in March, a drop from the $165,000 median recorded in February.

The average price for a new home was $209,400 in March, down from the $210,100 average price in February.

Existing-Home Sales Increase

Existing-home sales increased 4.8% to a seasonally adjusted annual rate of 5.44 million units in March, the National Association of Realtors said. Economists surveyed by Thomson Global Markets expected existing-home sales to hit a rate of 5.11 million units.

February's rate was revised to a pace of 5.19 million units from 5.18 million units.

Dr. David Lereah, NAR's chief economist, described sales as "phenomenal."

"This is just shy of the all-time record pace of 5.45 million in June 1999, and is the second-highest level of sales activity ever recorded," Dr. Lereah said in a written statement. "Clearly, mortgage interest rates that are near 30-year lows are bringing many buyers into the market at the beginning of the traditional home-buying season, and we're counting on the Federal Reserve to continue its accommodative interest rate policy to keep housing strong."

NAR President Richard A. Mendenhall said current sales are the hallmark of a historically strong year. "We've been making upward revisions to our forecast all year, and we now expect existing-home sales to rise 1.6% for all of 2000 to a total of 5.19 million, which will be the second highest on record," he said. "We don't expect every month to be as strong as March, but anything close to a five-million sales pace is exceptionally strong -- we'll be well within that range for the rest of the year," he predicted.

The national median existing-home price rose 6.5% to $143,500 in March.

Housing inventory levels at the end of March rose 2.6% from February to a total of 1.58 million existing homes available for sale, which represents a 3.5-month supply at the current sales pace. This is a slight change from the end of February, when 1.54 million homes were on the market, representing a 3.6-month supply.